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In debt markets, over the past few years it has paid to get the big calls right. That has been especially true for Alexandre Caminade, head of credit at Allianz Global Investors Europe, who has one of the best-performing funds in his sector.

Caminade manages the €900m Allianz Euro High Yield debt fund, which has returned 22.4% in sterling terms over the three years to March 31. That is according to the most recent rankings from institutional performance analyst Camradata.

By Allianz's own figures, which are quoted in euro, the fund is up over 57% over the same period, Caminade said, soundly beating its benchmark.

Allianz's fund is the second-best performing in Camradata's corporate bonds sector. The first, MacKay Shields' High Yield Active Core strategy, made 23.59% for investors in sterling terms. MacKay Shields didn't respond to requests for an interview.

Caminade said most of Allianz's outperformance was generated during the bond bear market in mid-to-late 2008 and the first quarter of 2009, but that the fund has continued to outperform since.

He said: "The three years can be split into three distinct sub-periods; the bear market between June 2008 and March 2009, the bull market starting in March 2009 and continuing to March 2010, and since then, a market that we think is in a transitional phase; neither bull nor bear."

Allianz began to outperform its peers in late 2008, he said, thanks to an emergency cash position of up to 25% and a move into highly-defensive sectors like Cable TV and telecoms. Caminade said at that time, the fund had favoured buying the debt of companies like Virgin Media or Cable Deutschland: "We were looking for very resilient business models, stable profit margins and strong cashflow."

In the autumn of 2008, the average 'spread' of high-yield debt yields over the yields available from safer government bonds hit a high of 2,200 basis points, he said. Following a few months of recovery, high-yield bond prices fell again in the first quarter of 2009, meaning that yields rose. They touched 2,200 again by March.

Caminade said: "I have been managing high-yield debt since 2000 and I remember the junk rally that took place in 2003. It is one thing to anticipate the bear market, it is another to get ready for a junk rally. In March, when the spreads hit that high for the second time, it convinced us it was time.

"We decided to move from an underweight position to an overweight position, by buying the kinds of bonds that suffered during the crisis, at a very low cash price. We bought into RBS bonds. We bought into Europcar, which was trading at 15% of its par value.

"At the time, the ratings agencies were predicting that 22% or 23% of high-yield debt issued would default, but their models use a lot of macro-economic analysis. We look at companies stock by stock from the bottom up, and our calculations suggested a default rate of only 7% to 8%. So the market was anticipating a rate of default that was much too high."

Caminade said the high-yield market has been calmer since then, though still with potential for profits - his fund remains fully invested in debt, with a minimal cash position. He has been focusing on picking the best companies, rather than taking big macro calls on sectors.

He said: "In 2011, we are still in this transitional period, and we started with an assumption of returns of around 8% to 10% for the year. This was correct until last month, when risk aversion started to increase again because of the Greek issue and poorer growth data in the Western economies.

"We will have to wait and see whether this disappointing news will continue. I think it's too early to say right now. We are constructive on the Greek situation - we think a solution will be found."